Nick Vivian, chair of the State Bar's Finance Committee, explained the proposed budget for fiscal year 2015, which includes a $30 dues increase.

District 2 Gov. Margaret Hickey voiced support for the proposed budget and a dues increase, saying it is critical to maintain current services to members.

Visit the State Bar of Wisconsin on Facebook for more photos from today’s meeting.

Jan. 31, 2014 – The State Bar of Wisconsin’s Board of Governors, the organization’s 52-member governing body, today discussed a budget proposal to raise State Bar dues by $30, which would represent the first dues increase in 10 years. The board took no action but is expected to approve a fiscal year 2015 budget at its April board meeting.

Recently, the board’s nine-member Finance Committee unanimously recommended the dues increase, which would require full dues paying members to pay $254 per year. New lawyers pay half dues the first three years, and emeritus lawyers pay no dues (see sidebar for potential changes to the dues structure for new and emeritus lawyers).

The proposed $12 million budget represents a modest 1.19 percent increase from last year’s budget, said Nick Vivian, chair of the board’s Finance Committee. He noted that proposed dues increases in prior years failed, in part because reserve funds were available to fill deficit gaps. “But those reserves are now largely depleted,” Vivian said. "The money isn't there."

A dues increase is necessary, Vivian said, to avoid significant cuts to major State Bar programs and services. It also includes money for two new positions in PINNACLE and the State Bar’s Law Office Management Assistance Program (LOMAP), as well as merit-based salary increases. Without a dues increase, the State Bar faces a budget shortfall of about $500,000 next year.

As State Bar Services Grow, Dues Remain Level

Vivian noted that in the last decade, member demand drove expansions in State Bar programs and services with no corresponding dues increase.

Questions or Comments about the Proposed Budget?

Contact Lynda Tanner, assistant executive director for the State Bar of Wisconsin, by org ltanner wisbar email or by phone at (608) 250-6116.

In addition, the consumer price index climbed 20 percent in the last decade, meaning the cost to provide services to members rose consistently.

“Had membership dues kept pace with the consumer price index, dues would be $45 greater than they are today,” Vivian said.

The budget aims to sustain core programs and allows the State Bar to maintain a stable financial course while addressing member needs, Vivian said. One board member suggested the State Bar should make cuts to programs before raising dues.

“We are funding the State Bar programs that the board’s strategic planning committee determines are valuable to the members,” said Vivian. “When you start talking about cuts, you impact programs that are determined to be valuable to the members.”

Proposed Budget Assumes Dues Changes for New and Emeritus Members

More than a year ago, the State Bar of Wisconsin’s Board of Governors approved a plan that would change the dues structure for new and emeritus lawyers.

Under the proposal, now pending before the Wisconsin Supreme Court, new lawyers would pay half dues for the first five years of membership. Currently, new members pay half dues the first three years.

The potential change addresses the economic struggles of new lawyers after graduation, and would reduce overall revenue by an estimated $122,520 for FY 2015.

Additionally, emeritus members who actively practice up to age 75 would pay full or half dues, depending on the number of hours billed (lawyers who bill the equivalent of 800 hours or more pay full dues; those who bill less than 800 hours pay half-dues). Currently, members who reach age 70 can elect to pay no dues.

Supported by the State Bar’s Senior Lawyers Division, the change recognizes that more lawyers practice well into their 70s while retaining access to State Bar services and programs. If approved, the plan would generate an estimated $26,880 in dues revenue for FY 2015, which helps offset dues revenue losses from new lawyers.

The proposed budget for FY 2015 assumes these changes, but would be modified if not approved by the Wisconsin Supreme Court.

A recent article posted on WisBar has more information on these proposals.

Vivian noted that the State Bar annually addresses whether programs and services should be funded or eliminated. He said the organization has trimmed expenses and eliminated waste through careful planning and the renegotiation of contracts with vendors. In addition, the State Bar reduced staff by 10 percent in 2012.

Board member Margaret Hickey said the State Bar, in the last few years, has provided “more services to more people with less money.” She said the approving the budget as proposed “is critical to maintain service to members,” especially newer lawyers.

Reserves, Salaries, and New Revenue Streams

Vivian also noted that since 2007, the State Bar has dipped into various reserve funds to plug holes in operating deficits, spending down about $1 million. This leaves reserves at a level below the five months operating expenses recommended.

In addition, the “dues stabilization reserve” – a fund established to mitigate dues increases – is budgeted to be depleted of a remaining $505,000 by the end of the current fiscal year (however, positive investment returns could minimize this need).

State Bar Secretary Jennifer Stuber suggested that a larger dues increase could help replenish depleted reserve funds, while other board members declared that any dues increase could hurt new and rural lawyers who are struggling financially.

In addition, Vivian said the proposed budget recognizes the State Bar’s effort to retain talented and experienced employees through a competitive compensation package.

The proposed budget includes a 4 percent bump for merit-based salary increases, combined with a 2 percent reduction in the State Bar’s contribution to employee retirement funds, better aligning base pay and benefits with the current marketplace.

State Bar Executive Director George Brown said the organization’s salary structure still lags by market comparison, based on an external evaluation conducted in 2010. But the proposed budget does not include any upward structural salary adjustments besides merit pay.

The budget plan also includes about $90,000 to fund a “business plan reserve.” These funds would help the State Bar explore and implement new revenue sources through business opportunities that could help mitigate dues increases in the future.

“We must identify other revenue streams that allow us to fund the budget in a meaningful way,” Vivian said. “Or we risk having this discussion every year.”

Yearly membership dues represent less than half of the State Bar’s revenue. Dues would fund about $5 million of the proposed $12 million budget for FY 2015. The State Bar relies on other revenue sources, such as PINNACLE sales, to fund the remainder.

Membership dues are separate and distinct from assessments imposed by the Wisconsin Supreme Court, currently $236 per year for full “active” members. Again, new lawyers pay a reduced amount for assessments and emeritus lawyers pay a $20 fee.

Vivian noted that the State Bar of Wisconsin’s dues amount is currently the lowest compared with Minnesota ($252), Iowa ($260), Indiana ($280), and Illinois ($320). Only neighboring Michigan ($180) has a lower bar dues rate among Midwestern peers.

Board Takes Policy Position on Expungment

The board adopted a policy position related to record expungment to support anticipated legislation expanding expungment remedies in appropriate circumstances.

John Voelker, director of Wisconsin State Courts, presented the budgeting picture for the court system, commenting that "the structure is under extreme stress."

District 3 Gov. Paul Swanson supports the proposed FY 2015 budget and questioned the wisdom of cutting programs and services.

Visit the State Bar of Wisconsin on Facebook for more photos from today’s meeting.

In 2009, the State Bar’s board unanimously supported a petition to modify supreme court rules on record retention and the expungment of records accessible through the Wisconsin Consolidated Court Automation Program (CCAP). After public hearings, the court held the petition in abeyance, choosing to work towards a legislative solution.

Now the State Bar’s Policy Committee expects the introduction of related legislation, and made its position known through a restated policy that supports the inherent authority of the courts to manage and expunge records in appropriate situations.

The position notes “compelling studies that demonstrate a mere contact with the criminal justice system can have a significant detrimental stigma on persons seeking employment or housing,” and supports efforts to expand expungment remedies.

Board Adopts $5 Keller Dues Reduction Amount

Under Keller v. State Bar of California, 496 U.S. 1 (1990), the State Bar may not use the compulsory dues of any member who objects to activities not reasonably intended for the purpose of regulating the legal profession or improving the quality of legal services.

To calculate the dues reduction amount for FY 2015, the State Bar reviewed all activities in FY 2013 to determine amounts not chargeable to mandatory dues.

An amount of $92,716 was identified. Based on the number of full-dues equivalent members, the board adopted a $5 rebate amount for those objecting in FY 2015.